SUPPLY
THE LAW OF SUPPLY
The law of supply states that there is a positive relationship between the
quantity that suppliers are willing to sell and the price level.
LEARNING OBJECTIVE
Explain the law of supply
KEY POINTS
• Quantity supplied moves in the same direction as price.
• The supply curve is an upward sloping curve.
• Producers are willing to increase production at higher prices to
increase profit.
KEY TERMS
SURPLUS
That which remains when use or need is satisfied, or when a limit is reached;
excess; overplus.
, SHORTAGE
A lack or deficiency
EQUILIBRIUM
The condition of a system in which competing influences are balanced,
resulting in no net change.
The law of supply is a fundamental principle of economic theory. It states
that an increase in price will result in an increase in the quantity supplied,
all else held constant.
An upward sloping supply curve, which is also the standard depiction of the
supply curve, is the graphical representation of the law of supply. As the
price of a good or service increases, the quantity that suppliers are willing to
produce increases and this relationship is captured as a movement along the
supply curve to a higher price and quantity c ombination.
THE LAW OF SUPPLY
Supply has a positive correlation with price. As the market price of a good
increases, suppliers of the good will typically seek to increase the quantity
supplied to the market.
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THE LAW OF SUPPLY
The law of supply states that there is a positive relationship between the
quantity that suppliers are willing to sell and the price level.
LEARNING OBJECTIVE
Explain the law of supply
KEY POINTS
• Quantity supplied moves in the same direction as price.
• The supply curve is an upward sloping curve.
• Producers are willing to increase production at higher prices to
increase profit.
KEY TERMS
SURPLUS
That which remains when use or need is satisfied, or when a limit is reached;
excess; overplus.
, SHORTAGE
A lack or deficiency
EQUILIBRIUM
The condition of a system in which competing influences are balanced,
resulting in no net change.
The law of supply is a fundamental principle of economic theory. It states
that an increase in price will result in an increase in the quantity supplied,
all else held constant.
An upward sloping supply curve, which is also the standard depiction of the
supply curve, is the graphical representation of the law of supply. As the
price of a good or service increases, the quantity that suppliers are willing to
produce increases and this relationship is captured as a movement along the
supply curve to a higher price and quantity c ombination.
THE LAW OF SUPPLY
Supply has a positive correlation with price. As the market price of a good
increases, suppliers of the good will typically seek to increase the quantity
supplied to the market.
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